AISL chief: Freight Rate Recovery to Continue

THE freight rate recovery on all trades is showing no signs of abating, according to Association of International Shipping Lines (AISL) president Octavio Katigbak.

He said the beginning of 2004 has been favorable for the liner business with soaring export volumes and improving freight rates.

“Customers are beginning to realize that freight rates have been down for a very long time now. It is time shipping lines recoup their losses due to low freight levels,” he pointed out. Katigbak said freight rates declined by more than 50% at the dawn of the Asian financial crisis in 1997. They have since gone up 10-11%.

COSCO Philippines Shipping, Inc. general manager Virgilio Angeles said the strong East Asia and China trades have helped international shipping lines in the application of cost recovery measures such as the imposition of general rate increases (GRI).

“Shipping lines have suffered a lot. Nine to ten years ago, the freight per twenty-footer in Europe was at $1,800. Now, it has been slashed by more than half, ranging from $700 to $800 per TEU,” he explained, adding that the same situation applied to freight to and from the United States.

Angeles said shipping lines refuse to call the current application of higher tariffs as rate increases. “We are just recovering what we had lost. Shippers do not even feel the pitch of the situation,” he said.

Meanwhile, China Shipping Manila Agency, Inc. general manager Wilfredo M. Monillas said he does not see full recovery coming any time soon because some carriers still refuse to impose GRIs. “For this to be realized, there must be a collective move from the carriers’ end,” he said, adding full recovery may be achieved in two or three years.